Understanding Human Life Value

Human life value aims to attribute a certain economic worth to one’s life

HLV is the acronym for ‘Human Life Value’ and plays a very important role in life insurance. Read to know more about it.

“How much life insurance do I need?” is a common question that most people ask themselves when they wish to buy life insurance. To answer this question, the amount of life insurance that you need depends on multiple factors. Now, HLV is a standardised approach to address this question.

Factors affecting your insurance cover

  • Number of dependents
  • Existing wealth built-up
  • Your earnings, present & future
  • Your expenses
  • Inflation
  • Liabilities (housing loan, car loan, etc.)
  • Future goals

Understanding HLV

As the name suggests, HLV aims to attribute a certain economic worth to one’s life. Like other income generating assets such as equities, deposits, bonds, etc., human beings also have an economic value, which largely depends on their potential earnings.

HLV is the sum required in case the main earning member becomes incapable of earning (due to permanent disability or demise) to allow the dependants to maintain their existing standard of living and fulfil their goals.

HLV is an estimation of one’s lifetime’s earnings. It is the present value of all the future earnings of a person. It is based on:

  • Age
  • Present and future earnings
  • Present and future expenses

Estimating your HLV

There are many formulas and models available to estimate your HLV. The factors are present age, income, investments, liabilities and expenses. However, as a rule of thumb, you can use an HLV multiple suitable to your age and multiply the same with your annual earnings to get an estimation of your HLV.


HLV Multiple

Up to 25 years

20 times

26-35 years

15 times

36-45 years

12 times

46-60 years

10 times

For a better estimate, it would be advisable to get in touch with a financial advisor or a life insurance agent. Your insurance needs change over time. Once you buy an appropriate amount of insurance cover, it is also important to make a periodic review of your financial position and enhance your insurance coverage, if needed.

The above article is contributed by IndiaFirst Life Insurance.

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